• Sprott Money
    05/05/2016 - 06:02
    Why is a Deutsche Bank mouthpiece suggesting “negative retail deposit rates or perhaps wealth taxes”? The answer is to (supposedly) stimulate our economies.

Black Homeownership Collapses As "Livable, Affordable Housing" Slips Out Of Reach

Tyler Durden's picture


President Obama's speech last during the 50th anniversary of MLK may seem sadly ironic now. As he noted, "Dr. King explained that the goals of African-Americans were identical to working people of all races: decent wages, fair working conditions, livable housing..." but the facts are that, as Bloomberg reports, while, for most Americans, the real estate crash is finally behind them and personal wealth is back where it was in the boom; For blacks in the U.S., 18 years of economic progress has vanished, with a rebound in housing slipping further out of reach and the unemployment rate almost twice that of whites. 

The homeownership rate for blacks fell from 50% during the housing bubble to 43% in the second quarter, the lowest since 1995. The rate for whites stopped falling two years ago, settling at about 73%, only 3 percentage points below the 2004 peak.

As Rev. Alvin Love, who knew Obama in the 80s notes, "it's going to take a generation to get back to the point where homeownership can build wealth in this community."


Via Bloomberg,



Congress passed the Fair Housing Act in 1968 and the Equal Credit Opportunity Act in 1974, which banned discrimination in lending and home sales based on race and national origin. Lawmakers followed in 1977 with the Community Reinvestment Act, to ensure banks were actively lending to credit-worthy borrowers in low-income areas.


The housing boom of the last decade, spurred on by the successive Clinton and Bush administrations that unleashed ambitious programs to widen buying, also brought about a practice known as “reverse redlining” or steering residents of minority neighborhoods into high-cost mortgages, which led to a flood of foreclosures when the market crashed. Many of the minority borrowers who were given subprime loans would have qualified for prime loans with better terms, according to the U.S. Justice Department.




“Given that African Americans and Latinos were particularly hard hit by the crisis, and even in some cases targeted for the worst loan products, we must hold financial institutions who made those loans accountable,” Housing and Urban Development Secretary Shaun Donovan said in a telephone interview. We “must make sure we’re doing everything we can to help responsible families recover and become future homeowners.”




The Rev. Alvin Love remembers the day in the mid-1980s that a young community organizer named Barack Obama rang the doorbell at his Lilydale First Baptist Church Roseland. ... The area’s history of mortgage discrimination mirrors that of urban enclaves from Boston to Los Angeles. The practice of “redlining” began eight decades ago when the Federal Housing Administration drew up maps using red ink to delineate inner-city neighborhoods considered too risky for lending. ...  “It’s going to take a generation to get back to the point where homeownership can build wealth in this community,” Love said.




“The President remains deeply concerned about the uneven recovery,” according to a White House statement.




The administration is also cracking down on discriminatory lending and trying to expand homeownership at a time when banks’ underwriting standards are tightest for those rebuilding from the recession. Lenders have raised down payment and credit score requirements and debt-to-income thresholds, which has had a disproportionate impact on minority communities, said Cowan at Woodstock.


“This is a new form of redlining,” Cowan said. “The same communities that bore the initial brunt of the foreclosure crisis, targets of the toxic lending, are now finding it more difficult to access credit as the economy starts to improve.”




“Places facing a longer road back from the crisis should have their country’s help to get there,” Obama said during a speech on housing in Phoenix last month.




The median wealth of white households was 20 times that of blacks and 18 times the Hispanic rate, a record gap in data going back three decades that is twice the pre-recession size, according to a 2011 Pew study.




“African Americans are starting way behind into this recovery,” Cowan said. “Because African American buyers were last into the market and bought at the most inflated prices, when the market deteriorated, they were the ones who lost the most.


And the plunge in housing affordability will not do anything to help that...

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